Rents in S.A. hit record high

By Valentino Lucio :
May 1, 2014
: Updated: May 1, 2014 8:32pm

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SAN ANTONIO — Increased demand for higher-end apartments in San Antonio has pushed rental rates to a record high.

The average rate for an apartment in the Alamo City is 99 cents per square foot in the first quarter, up nearly 4 percent from the same period last year, according to Austin Investor Interests, an apartment market research firm

Over the past four years, developers have built roughly 13,250 units in the San Antonio area. During that time, rents have jumped almost 20 percent.

With renters willing to pay higher rates, developers are building more units and offering more luxury amenities.

“The new product that's coming online is just higher-priced,” said Janine Claycomb of Austin Investor Interests. “And (prices) are going to continue to go up.”

Through the first quarter, construction started on 2,466 units, almost twice as many starts than during the same quarter last year. An additional 1,520 apartments came on the market, a nearly 40 percent jump from the first quarter of last year.

“The market is steady,” Claycomb said. “No matter how much new product gets thrown at the market, San Antonio just absorbs it. And I think we'll continue to see that for a while.”

The city's far West Side and the Loop 1604 corridor remain the hottest areas for multifamily construction.

On the West Side, which encompasses areas such as Alamo Ranch and Westover Hills, more than 1,400 apartments were added to the market in the last 12 months. Within a year, developers are expected to start building 1,500 units in that area.

In the area north of Loop 1604, nearly 2,000 apartments came onto the market in the last year, and about 2,700 more units will be under construction within 12 months.

A couple of projects proposed for those areas are Pecos Flats, a 380-unit complex at Potranco Road and Hunt Lane, and the 320-unit Village at Leon Springs near Old Fredericksburg Road and Interstate 10.

Average rental rates in those areas are among the highest in the city. On the far Northwest Side, the average is $1.23 per square foot, the second-highest rate in the city.

Despite the flurry of development in the northern half of the city, downtown also has the attention of developers. Since 2011, nearly 1,050 units have come on the market there. Roughly 1,400 apartment units are under construction, said Lori Houston, director of the Center City Development and Operations Department.

Most development downtown is clustered around the Pearl. Most projects in that area are apartments that can command rents closer to $2 per square foot. The average rental rate for an apartment downtown is $1.50, the highest in the city.

At Broadway and East Jones Avenue, Austin-based Argyle Residential plans to build a 302-unit project with about 3,000 square feet of retail space. Construction on the $40 million project is expected to start in June.

Chase Hill of Argyle Residential said San Antonio's diverse economy and growing sectors such as technology and medical are enticing to developers looking to the Alamo City for investment opportunities.

Developers also are heading south along the San Antonio River into the Southtown area. There, NRP Group started construction on Blue Star Phase II, a mixed-use project that will incorporate about 320 apartments.

And taking a crack at multifamily development, Transwestern is looking for a spot downtown to build an apartment community, said Larry Mendez, executive managing director for the real estate firm.

Multiple sources with knowledge of Transwestern's plans said it has interest in a vacant lot at Probandt and Cevallos streets, across from La Tuna Grill. Mendez, however, wouldn't confirm that.